For Promotional Use Only: Promo CDs freed for resale

By Thomas Yohannan


For Promotional Use Only – Not for Resale


For Promotional Use Only – Not for Resale.  If you’ve ever listened to a promotional CD or LP (yes, they still do exist), then you’ve probably seen that phrase stamped on the front label.  By stamping the phrase on promotional records, record companies believed that the copyright laws were being preserved.  Copyright holders have battled in court to try and limit  the scope of the ‘first sale doctrine,’ which gives us the right to resell the physical copies of albums we own(and books and other copyrighted works), so that it wouldn't apply to promotional records.

The ‘first sale doctrine’ says that once you buy a book or recording then you can do with it as you’d like as long as you don’t copy it.  For example, a CD can be lent, borrowed, sold or given as a gift to your beau.  Copyright holders despise this because it takes out all the economics of the recording after the initial sale.  It also creates competition through the secondary market.  Instead of having a multitude of buyers, there may only be one initial buyer who offers the product to others.  Libraries and their books would be illegal were it not for the first sale doctrine.  This is an ongoing debate.  In 2008, the courts upheld the first sale doctrine by saying that, based on the circumstances, promotional records are owned and not merely licensed out so recipients can do with them as they wish.  

This month, in the case of UMG (Universal Music Group) v. Augusto, the Ninth Circuit Court of Appeals in San Francisco, CA ruled that the sale of promotional records does not violate copyright laws.  UMG filed a lawsuit against Troy Augusto in 2007.  The Electronic Frontier Foundation’s Senior Staff Attorney Fred von Lohman took up his case and described the circumstances as such:


"Troy Augusto makes his living basically doing the age-old thing. He buys low and he sells high. He goes to Los Angeles-area record stores, he finds CDs that he recognizes as being collectable, valuable to a certain set of fans, picks those up and resells them on eBay for, he hopes, a profit. And it appears that major record labels — not just Universal — they object to certain promotional CDs being resold. For those auctions on eBay, the labels will send notices to eBay to try to stop those auctions. And Mr. Augusto has, to his credit, stood up for his rights and said, hey, I'm entitled to sell these. I own them. I bought them fair and square. You guys gave them away. The First Sale Doctrine ought to apply."


There does continue to be some confusion in the law where licensing intersects with software.  In September 2010, the same court ruled in Vernor v. Autodesk that software companies can restrict your ability to resell a program.  


That said, this case is a victory for resellers that restricts copyright right owners from simply slapping a notice on a work and trumping your rights to resell the physical copies of a work that you purchase under the first sale doctrine.

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